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Power Lunch

News/Business. Today's news on the economy, markets, real estate, media and technology. New. (CC)

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U.s. 11, Simon 9, America 8, Us 7, New York 6, Leder 4, China 4, Jeff Kilburg 3, United States 3, Citi 3, Tim Pawlenty 3, Europe 3, Lohan 3, Jeff 3, Romney 3, Mr. Romney 3, Jeffries 2, Aetna 2, Hp 2, Pancake 2,
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  CNBC    Power Lunch    News/Business. Today's news on the economy,  
   markets, real estate, media and technology. New. (CC)  

    September 20, 2012
    1:00 - 2:00pm EDT  

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impblts final trade time. dennis, talk gold. >> you want to own it. you want to own gold against dollars. you want to own gold in euro terms. i want to say hi to violet who is 92 and watches every day and trades stocks. we have some big news from washington this hour. some of this country's most well known companies including microsoft and hewlett-packard are being accused of skipping out on their taxes. jpmorgan today, basically saying there is going to be a melt up between now and the election. and they have some pretty lofty numbers. why? find out.
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and we're going to talk wliv with one very influential member of congress who wants to put a cap on your capital gains taxes -- forever. a lot of people think that that's a good idea. we'll talk about that in a minute. first down to simon at the nyse. he's my partner for the next couple of days. >> in just a short while members of congress will start a hearing on whether major mesh corporations are skipping out on their taxes. >> reporter: the hearing gets under way in just about an hour. we're already seen the report from senator carl levin. a democrat. head of the senate permanent subcommittee on investigations. senator levin said that he found significant abuses inside many american companies. >> multi-nationals have avoided billions of dollars in taxes using these offshore gimmicks. they have benefited greatly. but these loopholes and abuses exact a tremendous cost.
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>> reporter: there are two companies in the crosshairs today. first is microsoft. senate report saying from 2009 to 2011 microsoft was able to shift offshore nearly $21 billion or almost half its u.s. retail sales net revenue saving up to $4.5 billion in taxes on goods sold in the united states. we talked to microsoft. here's what they told us. they say, microsoft has a complex business and we must comply with the complicated tax code of the united states, resulting in an exceedingly complex tax structure. second company in the crosshairs here today is going to be hewlett-packa hewlett-packard. the senate committee saying since at least 2008, hp has used billions of dollars of intercompany offshore loans to effectively repatriate untaxed foreign profits back to the united states to run u.s. operations. that's contrary to the intent of u.s. tax policy. we talked to hewlett-packard. here's what they told us. they say, hp has complied fully with all applicable provisions of the u.s. internal revenue
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code and auditor ernst and young has audited. we'll learn more about what this is up committee found in about a half-hour. the committee on banking, housing and urban affairs, subcommittee on securities, insurance and investment is holding a hearing on high-frequency trading and they are talking about the possibility of enacting rules to slow things down a bit. i'm joined by jeff kilburg of kilburg capital who has a rather unique take on this topic. and greg cox has been doing terrific reporting on this on cnbc.com. you must a must-read article on high-frequency trading say it is worse than you thought. some firms themselves are extremely concerned. >> this report came from the chicago fed. they surveyed 30 industries,
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people connected to the hft business in one way or another. they found an industry where speed is everything, even beyond eclipsing any kind of controls where computer algorithms running wild. they're using patches to fix the run-away algos that are making the problems even worse. an industry where even the participants understand that we need regulation, we need to slow things down a little bit. >> jeff, you know that a lot of times they'll put in a fix and the market finds a way around it or market participants find a way around it. right? >> absolutely, sue. i've personally been a hood ornament on many hfc situations. it is very frustrating from traders because at the end of the day we feel like it is's not a level playing field. we're at a gun fight with a knife. we need a restrictor plate on these high-frequency trading systems, just like they have restrictor plates on nasa car, the race cars. so they can't go 500 miles per hour. we want to see some type of restriction to slow down 1
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million orders coming in. >> it is front and center in the news. we'll see whether or not they make that kind of change to the trading. simon? if you bank online with chase or bank of america, you are likely experiencing problems this week. kayla tausche's in new york with what's behind those particular issues. >> reporter: when bank websites go down, of course the first thought of every customer is, is my information safe? in this case, at least as far as we know, it was. bank of america's website suffered outages starting tuesday and jpmorgan chase's starting slowing yesterday. bank of america rep could not be reached for comment but jpmorgan's spokesperson was saying the fire wall wasn't breached. it was merely for them a matter of traffic but the clog could have potentially been caused by security breaches of employees. here's why. the federal bureau of investigation this week put banks and credit union on high alert after cyber criminals were stealing employees' logins and passwords to lack into accounts
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after hours to wire money to the banks overseas. in some cases these wire transfers were just shy of $1 million. banks are mum on whether funds have actually been stolen. it appears the inconvenience for customers logging in for now is just an inconvenience, simon. we should note that the fbi said that this problem largely affected the small to medium sized banks and credit unions, those large banks of course are not excluded from this. back to you. >> in a collective move, the defense secretary leon panetta is in china this week. he met with china's likely heir apparent who was of course inexplicably missing from the public scene until just a few days ago. japanese attacks on our u.s. companies and the infrastructure, panetta says he brought up the issue at every session but came away with little more than agreements to keep talking with the chinese. >> indeed, simon. a federal reserve report out today shows household net worth in the u.s. fell between april and june of this year. household debt rose a rate of
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1.3%. that's the biggest jump since the first quarter of 2008. jpmorgan meanwhile is ramping up its call on the s&p 500. they are expecting a melt-up into election day with the s&p exceeding 1,495 short term. jeff kilburg, what do you think. >> it is hard to disagree with this. one week ago chairman bernanke essentially green lighted all folks to get back in the pool. it is a very attainable goal right now, only 40 points away. i think going into the election we'll see this melt-up and that certainly plays well for the obama administration. >> indeed it does. jeff, would you trade it though at this point given the fact that we're facing the fiscal live, given the fact that we still have the election ahead of us, and there are probably going to be a few bumps along the road. would you trade it now or not? >> i would. i think you're absolutely right, you hit the nail on the head. we are at multi-year highs right now but it is a different sense. all day long they are allowing us to come back in an buy everything except for the u.s.
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dollar. you have to play what they give you. you cannot fight the fed, sue. >> indeed. thank you, jeff. see you in a few. the senate finance committee and the house ways and means committee holding a joint hearing today on tax reform and how to treat capital gains. joining us from capitol hill is a member of the ways and means committee, peter roskum, republican from illinois and chief deputy majority whip. you have a proposal on the table to permanently cap capital gains at 15%. make your case. >> i think that's where the action is. there's nobody that's really making a straight-faced argument that says we need more taxes to create a more robust economy. my argument is let's create predictability. let's make the u.s. the best jurisdiction to invest in. let's make the u.s. the best jurisdiction to save in and let's make the u.s. the best jurisdiction to create jobs in. capital gains in the form of
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capital is linked to our long term prosperity. think there is a strong argument to be made. >> people on wall street would probably agree with you, people on main street may not agree with you. how do you expect to get support -- what kind of support have you managed to muster for this proposal? >> well, it's an interesting thing. if you start to look at some of leading democrats and what they're starting to say, they're moving away from president obama's position on some of these tax rate issues and the capital gains issue is related to that. i think what's happening is, look. main street is saying we've been underserved by the past four years based on where the economy is growing. there is a relationship to capital formation. they may not call it that, but there's a recognition that capital has to form in order to create investment and long-term prosperity. so there's no reason that we should be having 8% unemployment and this is a remedy to move us forward. >> congressman, you talked about providing predictability for
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main street, wall street, the markets. one of the things that is not predictable right now is looming very large and that is the fiscal cliff. how do you think it will be resolved, how would you like to resolve it or see it resolved? >> well, the house has acted already to do two things. house said let's pass a -- do the current tax rates for another year but don't do them just for the sake of doing them. do them as a bridge to fundamentally reform the tax code which is some of the ways and means and the senate finance hearing consideration that was under way earlier. the house is also acted and said here's an alternative to the skwe sequestration that's poised to happen. sequestration was never meant to be policy. it was meant to be so provocative to move the super committee to action. so there's an opportunity to do this. i've been disappointed on the other side of the aisle. there's been some leading democrats that have said that they embrace the fiscal cliff
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and that we need to go over it and that makes no sense to me. pursue that for the sake of party dogma and to put the economy in a riptide? doesn't make any sense. my hope is that after the election cooler heads will prevail and we can come up with something sensible. >> you're a republican from illinois. it's been a tough couple of weeks for the romney campaign. what do you think mr. romney needs to do now? >> oh, look. i mean if you're barack obama, you're looking out at a landscape that's very, very challenging, because you've played all of the cards that you're going to play. you've got an economy that's under performing, health care that's disappointing and no energy plan in place and presidential leadership on the middle east that's been absent. the president has basically not laid out what he wants to do in the next four years and nobody wants to live through the last four years. so if i was mitt romney, i'd continue to concentrate on those themes and to have paul ryan by my side. i think those things are going
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to be very compelling moving forward. >> how much do you think the video that was released earlier this week has hurt mr. romney, if at all? >> look, i think the video more of an indication of the nature of the challenge that the economy is in. for example, why is it true that household income has dropped $4,000 since president obama came in to office? those are the questions that most americans are asking and those are the questions that folks want remedies to. they're not so much interested in gotcha comments. the president has made his missteps when he said you didn't build it and those types of things. but i think most americans are focused in on their own families, their own communities and their own possible prosperity an they see a president that is really underperformed. >> congressman, thank you for your time. we appreciate it. brian schactman joins us now with the market flash. >> sky work solutions, swks, has been investor date today. they upgraded guidance above
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consens consensus. because they are inside the guts of the iphone 5, expectations were higher. the stock getting hit rather hard here. you saw a midday swoon. 18.5% volume on this stuff usually, simon, now breaking news on bank of america. >> little bit of clarity on those bank of america lay-offs. reports they'll ramp up to 16,000 lay-offs as part of a new project could start as soon as monday. my sources tell me lay-offs will begin in the european investment banks and sales an trading unit on monday, as early as monday, with roughly 100 lay-offs there. the lay-office will move to the u.s. on thursday, september 27th. of course we know that these layoffs will take place across a wide variety of bank of america businesses, including in the branches and in some of the mortgage units. we should also note that in this 16,000 number, it sounds like a huge number, but that also takes into account businesses that
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bank of america has earmarked to sell. for instance, the uk and irish credit card business employs roughly 4,000 people. so that will be a big chunk ideally for the bank of that 16,000 number. you take into account the may layoffs, they've laid off roughly 2,000 people in may but only about 300 of those came from the investment bank. the rest was a part of a sale of the global wealth management unit that took place over the summer. little bit of clarity there, but they will begin laying off people as early as monday in europe. >> that's still cruel if you're amongst them. ahead in the program, tim pawlenty has quit as the romney campaign's co-chair to take another job. and you won't believe what it is. that's next on "power lunch." and costly political gaffes. we're talking about single mistakes that may have cost candidates their presidency. from gerald ford to howard dean. there's lots of room these days to mess up. john harwood has a great list coming up.
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. welcome back to "power lunch." brian schactman here at the markets. few names downgraded in the laser space. noble downgraded newport and ewp coherent, cohr, as well as ipg
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photonics. they do see softening going forward. weakness in asia. all of those stocks down 3%-plus. to the campaign trail now and a new headline that may be a new headache for the romney campaign. the co-chair of mitt romney's presidential campaign has quit to take a new job as ceo of a lobbying group for the financial industry. former rival tim pawlenty takes over the financial services roundtable in november. in a statement, the romney campaign offered its congratulations. simon? >> and we should point out, of course, that he was passed over to be second on the ticket and that may have been important to the man. nonetheless, the pawlenty headline comes just days after the dust-up over romney's taped remarks on the 47% remarks even the romney campaign admits could have been better stated. cnbc's chief washington correspondent john harwood has been looking into campaign gaffes and just how damaging they can be. >> exactly right, simon. this one appears to have hurt
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mitt romney, although the polling evidence is mixed. he's fallen behind in the rasmussen poll this morning which is typically pretty good poll for republicans, but he's tied 47% in the gallup poll which just came out a few minutes ago, their daily tracking poll. but romney's not the first candidate to mess up. if you look at the recent history of the presidential campaign, almost every major party nominee has at least one moment where they trip over their tongue and make a problem for themselves. let's go back and look at a few of them. four years ago, john mccain right at the hype of the financial crisis as lehman brothers was collapsing, went on the campaign trail and said this about the state of the economy. >> the fundamentals of our economy are strong. >> the fundamentals of our economy are strong. democrats, barack obama, used that to ridicule john mccain as out of touch with the realities of the economy. now even worse may have been four years earlier when john kerry was the democratic nominee. he was making a point about the
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iraq war which he'd supported, but later turned against and here's something that he said on the campaign trail about his support or opposition to money for the troops. >> i actually did vote for the $87 billion before i voted against it. >> nothing like voted for it before voted against it to underscore the idea that you're a politician who's talking out of both sides of his mouth. mitt romney of course had some family experience with the gaffe issue. his father, george whob was then the governor of michigan at one time a prominent presidential candidate visited vietnam and when he came back he said that the conversations that he'd had with diplomats and military leaders had changed his thinking. here's how he described it to a detroit tv station. >> when i came back from vietnam, i just had the greatest brainwashing that anybody can get. >> brainwashing. that was something that his opponents ridiculed him for. the idea that he was -- could be so influenced by that. it ended up collapsing his
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campaign. richard nixon became the democratic nominee. and interestingly, mitt romney a couple of years ago when he was running for the 2008 nomination was talking to my colleague at "the new york times" and said today that couldn't happen. in the youtube era, all presidents know when they're running for president, they're on all the time. >> john, thank you. we now know more about that campaign fund-raiser where mr. romney made that veshl gaffe and the man who organized it. turns out he has a story as well. robert frank has been digging in to it and it is fascinating, robert. >> it sure is, sue. thanks a lot. mark leder owns a private equity firm in florida called sun capital partners. sun capital is one of the companies under investigation by the new york state attorney general. the investigation centers on how private equity chiefs use a special tax strategy to lower their taxes. now court documents that i've uncovered give us the first
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details on how mark leder used this strategy. documents come from his divorce in 2009 from his wife lisa. they showed he directed nearly $3 million in income he would have made from management fees, converted that money into investments in the fund. the income that would have been taxed as ordinary salary at 35% became an investment that's taxed as a cap a tal gain at 15%. so less than half the rate that saved him millions of dollars in potential taxes. the documents say the leders were using a "normal amount of cash" to fund their investment and they invested in the fund with their fee income. sun capital would argue that by pouring this income back into the fund, leder is aligning his interest with those of outside investors. this practice is common in the industry and to be fair, the irs has never said that it's illegal. leder's spokesman had no comment. yet the disclosure of these new details connect two of the big controversies swirling around this election right now. first of course that romney
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fund-raiser that's now become infamous, that john just talked about, and the investigation into private equity tax practices. >> i'm sure there will be more on this coming. nicely done, robert. good work. in the meantime, are you stuck when it comes to figuring out which way this market will turn next? coming up on the program, we'll hear about the story of a few dozen people who were really stuck in the air last night. plus, we'll be analyzing the analyst wall street has new calls on financials. coach and limited brands. are they right? back in two.
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to welcome back "power lunch." brian schactman at the markets. take a look at shares of yum brands. pizza hut, taco bell and the like. listen, they increased their dividend 18% or basically 28 cents to 33 cents. it marks -- how about this -- the eighth consecutive double-digit increase in their dividend. dave novak and the folks at yum! like double digit growth. >> you think you're having a rough day out there? a few dozen amusement park riders were stuck upside down for two hours. 300 feet in the air last night at knotsbury farm near anaheim, california, not far from disneyland. luckily nobody was hurt but they were left stranded up in the air. we're going to do some analysis now so you will not be
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stuck with a bad trade. jeff kilburg of kilburg capital management is here. good to see you again. we're going to start out with ubs downgrading citi, goldman sachs and morgan stanley to neutral from buy after "the group as run up some 31% since late july." the run-up in the stocks since then, you see each one has had a pretty good performance. what do you think? >> i think it's more of a books and profits more than a downgrade. goldman i'd like to see a pullback. i like citi. morgan stanley still tainted from the facebook situation. i like the top two but i think the broad swap we realize this whole sector has moved up. >> with citi basically on the downside by 1% today. but the stocks have performed quite nicely year to date. let's move on and talk a little bit about credit suisse upgrading limited brands to outperform from neutral on "increasing conviction in limited brands' ability to
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sustain mid to high single digit comps at victoria's secret." why are we not surprised. limited brands up 2.66% today. credit suisse also making a call on coach downgrading that company this afternoon to neutral from outperform on increasing concerns about competition. that stock is off just under a percent. >> i agree with the limited brand, victoria's secret. i fear the viewer backlashfy don't agree with that. the coach situation, i find it interesting. if we are buying into this central bank support, think they're going to be okay. they're flat on the year. coach, i don't agree. i think there is some room in the up side. >> they've launched a men's store concept that's doing very well for them. thank you, jeff. simon, down to you. >> i wish there was more wind in the sails of the markets courtesy of the central banks because today we are looking a bit lackluster. mary thompson has the latest.
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>> we could look even more lack lust fer it wasn't for the central banks because a number of traders say here given the number of disappointing data points that we received on a global front, manufacturing today, if it wasn't for the idea that you do have the federal reserve pumping money into the economy, the markets could actually look a little worse. as it stands right now, the dow jones industrial average is down just about 14 points. what we have seen lately is once you have the european close, the markets trade in a fairly narrow range through the rest of the session. no change in that today given that the markets have been held. the dow at least in a 35-point range since the european close. quick check of dow components suggest continued strength in consumer stocks, strength in drug stocks reflected by kraft and merck. then weakness in a number of multi-nationals, like caterpillar, united technologies, the industrials. also hewlett-packard because tech is weak. financials are under some pressure as well today. in the meantime, we had a number of companies or ipos priced
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yesterday. take a look at trulia. priced at $17 a share, best performing of the ipos trading on the new york stock exchange in their first day today. checking on others, we have national bank holdings up slightly after pricing at $19.50. then also susser petroleum higher as well in the wake of its ipo. it actually priced at about the mid point of its range. then spirit realty, or src, priced at $15 a slight uptick there though it did price below the initial range. i want to close with jeffries. this has something to do with a story we followed a little over a month ago. jeffries came out and reported earnings better than expected thanks in part to the stake it in knight capital. it is up over 20% since then. jmp's analyst said if you take out the addition of knight, the company's earnings and revenue rose slightly shy of what his estimates were.
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given that we saw the strong run-up in the stock and given that maybe the earnings weren't quite as good and some people on the street expected, the stock is moving down today. >> very generous pricing on truvia. huge conversation continues about gold. though sharon, relatively flat into the close. >> relatively flat at the close. viewers may think, didn't she say that yesterday? well, yes, i did say it yesterday. in fact i've said it the last six days because gold prices have closed right around $1,770 an ounce for the past six straight sessions. a lot of that has to do with traders seeing consolidation here after the big run-up we saw the end of last week. there is a little bit of a downbeat sentiment in the metals markets even though silver is up a little bit. fact we're looking at these industrial demand numbers out of europe and china that are much weaker than a lot of folks thought they would be, that's one of the things that's keeping gold prices from rallying, traders say. add to that even though oil has
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recovered slightly here, we are looking at a downdraft of about 8% in the price of crude oil in three days' time. that's put a damper on gold as well. in terms of where you want to look at what the industrial growth outlook is like, look at copper and the hit it took today after that china pmi data came out. that's been down sharply. in terms of the industrial metals, we are seeing more weakness there as it appears that we are seeing some resolution in south africa with that miner's strike. back to you. sharon, thank you. let's move uptown to the nasdaq. bertha? >> we're seeing a little bit of weakness here. apple certainly contributing to that below $700. another day, another patent lawsuit against apple. also against google. both lower today. if you're keeping score at home, the tablets, the nexus, the ipad at walmart but according to reuters, soon you will not be able to get kindles once they run out. bed bath beyond is the big drag
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here after its earnings disappoint in terms of its earnings outlook though its acquisitions help the top line, bottom line is a problem. the great divide in retail here. starbucks starting that new verisimo cough me machine. bounceback today for qwest for the company holding a conference call. ceo saying that aetna policy change is not going to affect its scripts. it is working with aetna on educating them with that. we here at "power lunch" have been tracking the pointing, "the scream." we took you to the auk over the summer, we told you who bought it. next today we'll tell you where this masterpiece will really wind up. that's after the break. t k the d and combined it with modern technology. together you get quality services on your terms, with total customer support. legalzoom documents have been accepted in all 50 states, and they're backed by a 100% satisfaction guarantee. so go to legalzoom.com today and see for yourself.
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lunch" and the futures capital of the world, the chicago, the cm e-trading floor. as we start to see some of these headlines come out again, markets are moving in a way we kind of remember. what i'm talking about is italy coming over the wires, they're raising their outlook on deficits an lowering their outlook on gdp. boy, we've seen this movie before. look at the 24-hour chart of our 10-year. of course the early buying pushed rates down. it is creeping back but this dynamic is probably more a function of the big comeback
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from the day of equities. the safety of bunds is coming back. some of the lowest yields in 10s earlier and bunds today since the '13 fed statement. it is all about currencies, all about exporting. the big dynamic traders continue to talk about the most. the euro versus the dollar getting hit today but it is also getting hit versus the yen. we want to pay particular close attention to the euro-yen in the next come weeks. >> you covered a lot of bases there, include concerns about risks which are parentally putting the mergers on mergers an acquisitions. will the activity pick up after the election or not? founder of casablanca capital, one of wall street's biggest dealmakers is here. great to have you here. we look forward to seeing you every month. talk to me about risk and what it's doing to the m&a market. i know you mention things are falling off a little bit but put it in context.
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>> i think i read in "the journal" or "financial times" earlier in the week that m&a activity for the last month was down 25% year over year. i think -- and if you read this morning, almost every corporation you reported on is doing an $8 billion buyback, $3 billion buyback, les munvez is doing a buyback. everybody's doing buybacks rather than companies. >> why? >> i think they're scared. i think they're scared that they're buying the companies and they don't know what they're buying into. they don't know if they can get the synergiesynergies. credit's tight. it ought to be a time when mergers and acquisitions are booming, interest rates are low, stock prices are not low but relatively low, mergers should be just exploding. but they're not. but the world is a very dangerous place and the stock market is masking a lot of what's going on in the world and
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i think people are just rushing to get in because they're afraid. >> i've been surprised that the market has not reacted more to the conflict in the middle east, to syria, to the issues in south africa. i mean you name it, you look in any part of the globe these days, and there is conflict on a relatively large scale. why do you think the market is not reacting to it? >> i can't answer that. we were talking off camera. i said -- i mean the administration -- israel could take out iran's nuclear facilities tomorrow and there was barely a mention of anything on the front page of the four major newspapers. and that could spread to another 50 countries. it's a disaster waiting to happen. and nobody's doing anything about it. nobody's talking about it. the state department is barely talking about it. sure, they're mentioning it but it is not affecting the stock market in the least. the spanish bond yields are in
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the toilet again. so europe is not fixed, period. >> no, i would say that's a pretty fair statement. >> end of statement. since the last time i was here, the fed did qe3. $40 billion a month, forever. they're keeping interest rates down to, what? low through 2015. but what if interest rates, as larry and herb, bunch of people have said, go up on their own? >> what is the fed to do? >> and every -- i forget what it is -- that could happen. we are not alone in this and the fed doesn't really govern it. and last, but certainly not least, my favorite subject -- jobs. no one has jobs anymore. there was lousy job information this morning. where are we creating jobs?
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buying back $40 billion worth of mortgages may help the housing market, but who's buying those houses? >> if they don't have jobs. >> yeah. >> yeah. do you think the market will wake up to that? is it preoccupied with the fiscal cliff, even though it perhaps is not getting as much press in some sectors as it should be. we certainly cover it aggressively here at cnbc -- >> but congress isn't. >> but congress is. your word, not mine. when do you think market might recognize that and what do you think its reaction would be? >> i have two answers to that. one, i think part of the malaise in not talking about the mideast and a lot of other things is everybody's waiting for the election. as soon as the election's over, the fiscal cliff is going to be right in everybody's face. and there will either be a compromise or the we and the market will start to react to that. and some other event around the world is sure to happen sooner
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or later will trigger something in the market, a sell-off, something. >> so buyer beware. >> that's the way i feel. i mean because if it doesn't -- if people don't start waking up to the dangers in the market, the other side of the coin is u.s. companies, some are doing good. >> thanks so to see you. see you next month. good afternoon if you've just joined us, these are our headlines on "power lunch." average rate on a 30-year fixed mortgage, falling again this week to 3.49%. that marks another all-time low. the number of americans applying for unemployment falling only slightly last week to 382,000. shares of truvia surging on day one of their trading down here at new york stock exchange.
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trulia. a gain of 45% after the san francisco-based real estate website was priced at $17 a share. now let's get back to hq and a market flash. a big mover for you today. ihs reporting its third quarter. we have net income and also revenues climbing but that still fell short of wall street forecasts. plus, ihs lowering its full-year earnings and revenue forecast. that's what's really hammering the stock right now. the chairman and ceo says the subscription business is fine but that it is the non-subscription business that's softening. you have customers delaying business and spending decisions. that's sending the stock down nearly 19%. >> thank you. straight ahead on the show, a robbery netting 10 million. the victim just happens to be a cnbc regular guest. that's next. plus, what america really thinks of high-frequency trading. the finance.yahoo.com poll is also ahead on "power lunch." [ male announcer ] when this hotel added aflac
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show for you coming up at the top of the hour. and it is about the most, the most likely to succeed starts, the most important election issue, the most expensive cars, boats, homes, you get the idea. we've got it all. that is our very special edition of street signs starting at 2:00 p.m. eastern. the most coming up at the top of the hour. sue, back over to you. >> look forward to it, mandy. see you in two. time for today's yahoo! finance poll results. members of congress take up high-frequency trading today. do you think it should be banned? 6 60% said yes. 16% said no, leave it alone. 24% said no but it does need more regulation. simon? star fixed income investors and cnbc regular jeffrey gundlach is the victim of a $10 million burglary.
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according to the "los angeles times," his santa monica home was broken into last week while he was away. items stolen include several high-end paintings, a 2010 red porsche carrera, five luxury watches, wine and cash. >> simon, the iconic painting "the scream" became the most expensive artwork ever sold at auction fetching nearly $120 million when it sold at s sutheby's last may. leon black, also incidentally, sits on the board of trustees at the museum of modern art in new york. so perhaps it's no surprise that "the scream" will go on view at the moma starting october 24th for a six-month period giving visitors a very rare chance to see the painting often referred to as the mona lisa of modern
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art. if there was a stock market that traded celebrities, which would you sell and which would you short? cnbc's jane wells is live in l.a. and she has a great list. >> i've always wanted to do that on television. you know, we usually like to do more than just a long or short trade. we're going to talk about paris trades, maybe a strangle, a buy limit order. i like to look at three or four celebrities but this week there's only one. find out who it is after the break. now, that's what i call a test drive. silverado! the most dependable, longest lasting, full-size pickups on the road. so, what do you think? [ engine revs ] i'll take it. [ male announcer ] it's chevy truck month. now during chevy truck month, get 0% apr financing for 60 months or trade up to get the 2012 chevy silverado all-star edition with a total value of $8,000. hurry in before they're all gone!
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welcome back to "power lunch." we're watching carmax after it reported its fiscal second quarter numbers. the earnings rose slightly we saw improved retail sales and income in its financial unit though the bottom line was hit by higher overhead costs. still it was under what wall street was expecting, this stock taking a hit of 7.5%. brace yourself, it is time for the "power rundown." with us jane wells and neil weinberg. neil, you guys first reported
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former minnesota governor tim pawlenty had left the romney campaign to head of the financial services roundtable. i think they're trying to soft pedal what they want. they're not going to knock heads with the democrats. they're going to try for the soft approach. >> politically of course the democrats will make a lot of the fact that pawlenty is quitting the romney campaign. but did he hope to be on the ticket. he wanted to be the vice president candidate. he campaigned hard for that and ultimately he was looked over. >> yes. i guess there's not a lot of love lost, however there was talk that he might get a cabinet position. and perhaps he doesn't think there's going to be a republican cabinet to get a position in at this point. >> interesting. let's talk about starbucks entering the single shop coffeemaker business. a bold move, neil, or do you think too late in an already overcrowded market? >> seems like a very crowded
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market to me. i know hour schultz has taken this from brew to a huge global colasses. you can get it at target or walmart. i don't see where they're going with it. >> i would just say that apple didn't have the first cell phone, andrew. it kind of worked out okay. i only think there is a reason of only 75% of starbucks customers don't have these machines. i'm not sure where i want a machine where i have to clean the steamed milk out of it. but you know what? they convinced me to buy $4 coffee. >> jane, talk about the blog that you've got about celebrity trades which seems to be getting a lot of attention at the moment. what are the winners and losers for you? >> there is only one trade this week. shorting lindsay lohan after her arrest for an alleged hit and run in manhattan but we got more creative.
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look at a paris trade here with amanda bynes. short lohan, long bynes. bynes no longer has a car. her parents are come being to the rescue. in lohan's case, her parents are the problem. a commodities trade in nut futures. short lohan, long joaquin phoenix because he was only pretending to be crazy as a rapper. finally, you can do a buy limit order if you think she has a future. you can do a strangle trade, as in i want to strangle myself every time i hear about her or you can just d-list her because she may be on the d-list. >> i got to admit, i know bhor banks than i do celebrities but the new york stock exchange where we're sitting has a section 303a which says you can get bounced for unethical behavior so i think i would go for the d listing here. >> or wearing jeans. good to see you both.
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in the next hour, a special edition of street signs where it's almost all about "the most." the most powerful women, the most undermentioned stocks. it's the most coming up. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity.
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flat as a pancake. flat as a pancake as you can see how slightly negative we are erasing earlier gains on the market. what is extraordinary is how the economic data overnight has b n been. the profit warnings, preannouncements continue to come but we're held up there courtesy, of course, of the fed and the ecb. those central banks really enabling the mark to sail on undeterred. question is as you go further into the election and the fiscal cliff, what happens then? >> those sentiments echoed by a guest earlier today. jeff kilburg, simon is back with me. address the oil situation. we saw that whipsaw in trading earlier this week. >> we did. on monday we saw that depth charge which was brought upon by the high-frequency trading systems and they did a great job acting like a boa constrictor this week squeezing all the way
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down to $90. we are seeing a little bounce so i think it is worth while watching oil after it's all been shaken out. >> what would you do? would you trade it right now or wait until it settles? >> it came down in the uso to the 100-day moving average. bam. you should see it go back up as we see this coordinated central bank efforts. it is going back up. there is a lot of geopolitical backdrop oversees. only treason came off is essentially the spr -- >> it's interesting because it is not going up. you wonder if the central bank action is not effective on oil at this stage when it was so effective before, what does that mean for the future on other trades? >> i think the algorithms took care of everything. that's why it went down to 90. i think you will see the next five trade days a bounce in crude oil. >> how long you think before we get some sort of new regulation on high-frequently trading? >> it's in its infancy, sue. i think it is light years away until they figure out how to regulate it. >> well, simon, it's been a pleasure. i think you're back with me tomorrow.